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Monday, October 11, 2010


In the United States, small businesses account for about half of the Gross Domestic Product (GDP) and more than half of the country's employment. As we all know, the GDP recently dropped to a paltry 1.6% and, as of this writing, the country's unemployment rate is up to 9.6%. Recognizing the role small businesses play in the nation's economy, our politicians are slowly trying to figure out what can be done to help them out. Actually, it doesn't take a genius to figure out what is wrong or what to do.
Historically, small businesses invested heavily in new innovations during recessions. Unlike big businesses which tend to be imbued with bureaucracy and slow to react, small businesses typically can turn on a dime. Not so today as small businesses are hesitant to make any move or invest in anything until they see signs the economy is picking up. This is compounded by Obamacare which has business owners scared to death in terms of its impact on their business. They are now questioning why they should hire anyone if the government is only going to shove regulations and fines their way. Regardless of what you think of Obamacare, good or bad, nobody understands it and, as such, they are not inclined to hire anyone until this matter is resolved. Although they would like to hire employees, if Obamacare is implemented, look for small business owners to hire subcontractors instead. However, if you really want to kill the small business workforce now, allow Congress to raise the minimum wage again. We certainly cannot afford any inflationary measures at this time, including tax hikes.
Until such time as the economy begins to pick up and consumers start spending again, small businesses will continue to flounder. Stimulus programs do not work, but tax incentives just might, assuming they entice consumers to spend and businesses to invest. The President and the Congress moved much too slow in this regard. Look for a dismal Christmas retail season as a result which will have ripple effects on the economy.
Other than this, we hear small businesses are in need of financing to hire more workers and expand operations. This may be so, but I'm skeptical as a revitalized economy would take care of the problem better than incurring more debt. Nonetheless, the Congress is working on legislation to improve financing and possibly offer tax credits. As of this writing, lawmakers were still debating the issue. Regardless of what they come up with, I suspect it will be too little, too late. As to perpetuating the Bush tax-cuts, what's our alternative? Cancelling them means raising taxes in the middle of a recession which certainly will not stimulate business or spending.
The last thing small businesses want is to get government off their back. It is hard to find one small business owner who doesn't have at least one gripe about government red-tape and fines, be it at the federal, state, or local levels. Government bureaucrats give the impression they are shaking down businesses thereby paralyzing them from doing anything. I can't begin to tell you how often I hear this complaint.
To summarize, what does small businesses want? They want the economy moving again; they want consumers spending money and to be able to invest in themselves through tax incentives. They also want government bureaucrats off their backs (flatten government). More than anything, small businesses want to work, but they want government to run interference for them as opposed to trying to impede their efforts. The best thing government can do for small businesses is to lead, follow, or get the heck out of the way.
Keep the Faith!
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Tim Bryce is a writer and the Managing Director of M. Bryce & Associates (MBA) of Palm Harbor, Florida and has over 30 years of experience in the management consulting field. He can be reached at
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